While legislation signed last month to prop up Florida home insurance companies acts as a small carrot to maintain the state’s faltering private market capacity, the newly approved state budget offers little regulatory sticks to ensure that companies will be there at least in the short term.
The budget includes funding for the state’s Office of Insurance Regulation (OIR) to hire actuaries and examiners to scour insurers’ books to ensure they “adapt to changing market conditions.” . In addition, the state has added funds to “tested” hurricane models used by insurers to set rates and capacity.
“Florida has one of the largest insurance markets in the world and this budget helps strengthen consumer protections and promote a more resilient market,” said a statement from Florida Insurance Commissioner David Altmaier.
According to the commissioner’s office, the new budget includes:
$526,089 for new state actuaries to “thoroughly review filings” and hire a “financial administrator” for Florida’s office of administration.
$750,000 for property and casualty reviews ‘to look closely at insurers’ financial stability’
The financial stability of Florida home insurance companies has been called into question as the current hurricane season approaches. Last month, Federated National embarked on a court-ordered restructuring and was forced to cancel 56,000 plans after its credit rating downgraded.
Separately, the insurance commissioner said an additional $62,000 was added to the state budget to conduct annual “catastrophe stress testing” of Florida homeowners’ insurers’ hurricane models. According to the statement, the stress tests “will assess their ability to withstand the financial impact of a series of catastrophic events” and will be conducted by Florida International University (FIU).
The CRF is also the administrator of the Florida Public Hurricane Model.